There is a comforting story about the debt ceiling that goes like this: Back in the 1990s, the U.S. was shrinking its national debt at a rapid pace. Serious people actually worried about dislocations from having too little government debt. If it hadnt been for two wars, the tax cuts of 2001 and 2003, the housing meltdown, and the subsequent financial crisis and recession, the nations finances would be in fine condition today. And the only obstacle to getting there again, this narrative goes, is political dysfunction in Washington. If the Republicans and Democrats would just split their differences on spending and taxes and raise the debt ceiling, we could all get back to our real lives. Problem solved. Except its not that way at all. For all our obsessing about it, the national debt is a singularly bad way of measuring the nations financial condition. It includes only a small portion of the nations total liabilities. And its focused on the past. An honest assessment of the countrys projected revenue and expenses over the next generation would show a reality different from the apocalyptic visions conjured by both Democrats and Republicans during the debt-ceiling debate. It would be much worse.

It's an excellent choice for spurring discussion. The article crudely distorts economic realities, because it boils down to little more than an extreme left-wing political rant. Here are a few examples of politics posing as economics:

MSNBC said:

...Failure to increase the borrowing limit would harm American prestige and the global financial system...

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Prestige would only drop with foreign leftists while financial interests would continue to see stable prices for US currency, debt, and equities.

MSNBC said:

...real threats to the U.S.s long-term economic health, which will begin to strike with full force toward the end of this decade: Sharply rising per-capita health-care spending, coupled with the graying of the populace...

...You start to see why, absent signs of a serious commitment to deficit reduction, the rating services are warning they may downgrade the federal governments triple-A rating...

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Some rating agencies have talked and others have already downgraded US debt. Market values of US debt are unchanged and that means the markets have downgraded their rating of the rating agencies. Remember that a few years ago both Moodys and S&P failed to downgrade mortgage debt portfolios until market values had already collapsed.

Largely agree with expat on this one but a little exposition is needed.

The welfare states of Europe, the Far East and the British commonwealth are built on US garrisons and military spending directly and indirectly subsidizing those economies.

There are only two sources of the revenue needed that are big enough to balance the US budget: entitlements and defense. Both need to be cut drastically with most defense cuts coming out of the garrisons.

Places where US garrisons have been pulled out, Greece, Iceland and the Philippines, generally have not done well. Panama is the major exception.

Republicans in Congress, not wanting to appear to defend the rich, have attempted to block any deal that includes higher taxes on the grounds that tax hikes are &#8220;job-killing.&#8221; But experience shows that in a period of slack demand like the present, tax hikes are no more job-killing than spending cuts, and probably less so. Cutting spending &#8212; say, by firing federal employees or canceling procurement &#8212; removes demand from the economy dollar-for-dollar. A dollar tax hike, on the other hand, especially one aimed at upper incomes, cuts demand by less than a dollar. Those who pay the tax cover part of it from their savings and only part by reducing their spending. If lawmakers insist on using the phrase &#8220;job-killing,&#8221; Roberton Williams, a senior fellow at the Brookings Institution-Urban Institute Tax Policy Center, wrote in a recent blog post, &#8220;they should apply it equally to both tax increases and spending cuts.&#8221;

There is a comforting story about the debt ceiling that goes like this: Back in the 1990s, the U.S. was shrinking its national debt at a rapid pace. Serious people actually worried about dislocations from having too little government debt. If it hadn&#8217;t been for two wars, the tax cuts of 2001 and 2003, the housing meltdown, and the subsequent financial crisis and recession, the nation&#8217;s finances would be in fine condition today. And the only obstacle to getting there again, this narrative goes, is political dysfunction in Washington. If the Republicans and Democrats would just split their differences on spending and taxes and raise the debt ceiling, we could all get back to our real lives. Problem solved. Except it&#8217;s not that way at all. For all our obsessing about it, the national debt is a singularly bad way of measuring the nation&#8217;s financial condition. It includes only a small portion of the nation&#8217;s total liabilities. And it&#8217;s focused on the past. An honest assessment of the country&#8217;s projected revenue and expenses over the next generation would show a reality different from the apocalyptic visions conjured by both Democrats and Republicans during the debt-ceiling debate. It would be much worse.

Steven Spielberg couldn't have written more unbelievable fantasy. We've had no tax cuts in over 7 years, only tax increases and the threat of more to come and because of this the economy is in the toilet.

This phony debt-crisis is only about raising taxes. Not on the rich, but on all of us. The trick all along has been to make us feel it was necessary.

Well, I don't think it's gonna work, and I'm afraid the left will find out what people think of this scam Nov. 2012.

Republicans in Congress, not wanting to appear to defend the rich, have attempted to block any deal that includes higher taxes on the grounds that tax hikes are &#8220;job-killing.&#8221; But experience shows that in a period of slack demand like the present, tax hikes are no more job-killing than spending cuts, and probably less so. Cutting spending &#8212; say, by firing federal employees or canceling procurement &#8212; removes demand from the economy dollar-for-dollar. A dollar tax hike, on the other hand, especially one aimed at upper incomes, cuts demand by less than a dollar. Those who pay the tax cover part of it from their savings and only part by reducing their spending. If lawmakers insist on using the phrase &#8220;job-killing,&#8221; Roberton Williams, a senior fellow at the Brookings Institution-Urban Institute Tax Policy Center, wrote in a recent blog post, &#8220;they should apply it equally to both tax increases and spending cuts.&#8221;

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Firing a job killing government employee & taking away their defined benefit pension is always the best form of stimulus.

Republicans in Congress, not wanting to appear to defend the rich, have attempted to block any deal that includes higher taxes on the grounds that tax hikes are job-killing. But experience shows that in a period of slack demand like the present, tax hikes are no more job-killing than spending cuts, and probably less so. Cutting spending  say, by firing federal employees or canceling procurement  removes demand from the economy dollar-for-dollar. A dollar tax hike, on the other hand, especially one aimed at upper incomes, cuts demand by less than a dollar. Those who pay the tax cover part of it from their savings and only part by reducing their spending. If lawmakers insist on using the phrase job-killing, Roberton Williams, a senior fellow at the Brookings Institution-Urban Institute Tax Policy Center, wrote in a recent blog post, they should apply it equally to both tax increases and spending cuts.

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If you want to start firing federal employees start with the IRS, EPA, and the Dept of Education. All of them cost more then they're worth.

We don't spend that much on defense. We could cut all defense spending completely and not balance the budget. The deficit is almost twice defense spending. We spend a huge amount on welfare. We could balance the budget from welfare alone and not even cut it by half.

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